Monday, August 8, 2011

MORE "YELLOW DOG" FUNDS.

See what you think about this scan of the front page of the Sept. 28, 1905, New-York Daily Tribune. Check out the article, MORE "YELLOW DOG" FUNDS, at the top of Columns 5 & 6---specifically paragraphs 4, 7, 8, 12 and 15. Does this look like the original typescript to you, altered perhaps by age or scanning artifacts, or something worse?

It would be significant if Chronicling America, the work of the Library of Congress, had sunk to the same spooky lows as Thomas M. Tryniski's---of 309 South 4th Street, Fulton, New York, 13069---effort's at Orwellian information f l o w ---fultonhistory.com.

But what could they possibly be trying to suppress when surface details this absolutely delicious are left? Of course, with government investigating capitalists being reported on in newspapers retrieved via the web, the serpent is always eating his tail. Supposedly, Pulitzer's New York World can take credit for single-handedly breaking the Equitable story wide open, and forcing this distasteful display onto the poor public. I haven't found copies of that original reporting online yet, although several year-end synopsis are available.

A second Equitable "yellow dog fund." apparently employed as a feeder for the famous "J. W. A. No. 3" account, was disclosed at the close of the session of the Armstrong insurance investigation yesterday, and so important did the record of this account, preserved in a private and unpretentious black book, seem to the members of the committee that they sat for an extra hour, while Henry Greaves, who was the apparent keeper of this account, testified to the history of this secret record, and incidental to the existence of an earlier secret fund known as the Marcellus Hartley account.

The second of the "yellow dog"accounts, that which occupied much of yesterday's session, was known as the "George H. Squire Trustee" fund, and was deposited with the Equitable Trust Company. In it were carried not a few of the profits made by the Equitable in various syndidate participations and not entered in any other place, and it was apparently subject to the direction of McIntyre, Jordan and Alexander. From this account sums aggregating $265,000 were transferred to the "J. W. A. No. 3 account." and to this account at its inception $55,000 from the Marcellus Hartley account was transferred.

Moreover, it was disclosed that this fund and the cash book for it were in the keeping of Thomas D. Jordan, the former controller of the Equitable, who was summarily dismissed by
Paul Morton for refusing to tell about the JAW No 3 account, and who has not yet been reached by the committee, which desires him to testify before the investigation closes.

In addition to a number of profits from syndicates in which the Equitable participated, which appear in this account, there are evidences of other syndicates in which the Equitable participated only through this fund and from which profits were directed thither instead of to regular accounts.

As to the uses to which this fund were put, and whether they were similar to the uses for which the New-York Life employed its "nonledger" accounts, such as campaign contributions and "Andy" Hamilton transactions, no evidence was adduced yesterday, but it was clear that Mr. Hughes believed he was following a "warm" trail, because of his refusal to leave it at the usual time of adjournment.

Hardly less interesting than the developments concerning the George H. Squire trustee fund were those regarding the syndicate operations of the Equitable through "George H. Squire and Associates," as well as "James H. Hyde and associates" and "Louis Fitzgerald and Associates." In previous testimony the fact had been shown that the Equitable not infrequently received its participation, not directly from syndicate managers, as is the usual proceeding, but through one of the "and associate" combinations of its officers.

Yesterday the fact was shown that not infrequently the whole burden of carrying the personal participation of the "and associates" —that is, of furnishing all the money— was performed by the Equitable, and that the "associates" figured only when the time for the division of profits arrived. Among those who profited in syndicates in which the Equitable participated were the following officers of the company: Senator Chauncey M. Depew; the president, James W. Alexander; the vice-president, James Hazen Hyde, and George H. Squire, of the private "trustee" account and of the various "associates" syndicates

Senator Depew participated in two syndicates, his interest aggregating $150,000. Moreover, in several of those transactions, notably in Chicago and Northwestern, profits apparently due the Equitable had, it seemed, vanished, to be found in some cases in the George H. Squire trustee
account and at other times not to be found at all.

That the Equitable, through Paul Morton, intended to seek civil action in the courts to recover interest wrhere loans had been carried for the officers of the company by the Equitable, was one of the suggestions contained in the testimony of Henry Rogers Winthrop. George H. Squire's successor as financial manager of the Equitable, who was on the stand most of yesterday's session.

ACCOUNTS BADLY TANGLED.

In relation to these syndicate participations through the medium of associates the hopeless, tangled condition of the Equitable records of these affairs was manifest from Mr. Winthrop's testimony. Time and again he testified that expert accountants were still endeavoring to trace the receipt or non-receipt of profits. Not infrequently his only means of showing that the Equitable had participated or was entitled to profits was through calls made on it by syndicate managers for its agreements. Following this up the present management of the Equitable had communicated with the syndicate managers, and from them learned the exact amount of the Equitable's participation and the amount of the profits which the managers had delivered to the company. Then the hunt for the account to which these profits had been transferred began. Sometimes they were found credited to profit and lose, sometimes embodied in the "George H. Squire Trustee" fund, and, in several cases not found at all.

Just how many items of "missing" profits were discovered was a matter of considerable doubt because of the entirely confused state of the Equitable books at the present time.

Two such items in Chicago and Northwestern aggregating $44,000 were disclosed, and items amounting to upward of $100,000 more, which might ultimately have to be placed in this category, were shown.

In view of Jacob H. Schiff's testimony regarding the relation of his firm to the Equitable in bond sales in syndicate agreements, interest was shown in the fact demonstrated yesterday that in several instances the Equitable had definitely paid checks directly to Kuhn. Loeb & Co.

A minor but amusing detail of Equitable management shown in yesterday's proceedings was a clerk loan, recalling the famous $1,000,000 transaction in the name of a $10 a week clerk disclosed in the New-York Life some time ago.

This transaction was for $626,090 in the name of Eugene Barrington, a $2,000 clerk. No record of the loan could be found on the books of the Equitable, and the obvious intention, as shown by the testimony, was to get this amount of the bonds of the Atlantic Coast Line off the books
of the society.

The Equitable Trust Company, which made the loan, charged interest on it, and the only evidence of the loan to be found by the Equitable was the request of the trust company in a letter for the payment of this interest.

Some suspicion was directed toward this transaction, as Mr. Barrington is the clerk who has charge of the advertising expenditures, and these items are being carefully scanned.

The testimony of Mr. Winthrop on the Equitable syndicate operations was not closed last night, nor was that of Henry Greaves, the keeper of the "George H. Squire Trustee" fund. Both will be recalled in the morning session today. The next witness to be called is Jacob H. Schiff. While the committee took no definite action on the point yesterday, both James McKeen, of counsel for the committee, and Ezra P. Prentice the secretary, agreed that both Senators Dryden, of New-Jersey, and Depew would be called. William A. Day. the new controller of the Equitable, and Senator Morgan G. Bulkeley president of the AEtna Life Insurance Company, of Connecticut, were in attendance yesterday.